Friday, September 19, 2003

HUD cites pattern of suspicious data used to support nine grants awarded under Janklow.

By Denise Ross, Journal Staff Writer

The state of South Dakota will cancel $511,200 in federal grant money it awarded in December to a shooting range planned for northeast of Sturgis and will repay the federal government $313,800 already spent on the project, according to a Thursday letter.

South Dakota's Tourism and State Development secretary John Calvin sent the letter to a HUD official in Denver in response to a HUD investigation that found demographic data used by the state to support the shooting range grant and nine others differed significantly from U.S. census data.

In their report to the state, HUD officials note they have the authority to withhold future grant money if they aren't satisfied with the state's response to the 74-page report issued Aug. 18.

The state's plan to cancel and repay the shooting range grant, totaling $825,000, will require HUD approval before it is final. HUD officials in Denver did not return a telephone call from the Rapid City Journal on Thursday.

Former Gov. Bill Janklow, now South Dakota's congressman, awarded each of the grants now in question under HUD's Community Development Block Grant program. Under the CDBG program, units of local government receive chunks of federal money and have discretion in awarding grants to projects that meet criteria set forth by the federal government. In South Dakota, all CDBG money goes through the state except the grants awarded in Rapid City and Sioux Falls, where the cities distribute grants.

What the state's decision to cancel the shooting range grant means for the future of the project was unclear Thursday. Organizers had planned to use only $75,000 in local funding for the $900,000 project. The nonprofit Black Hills Sportsmen's Complex had planned to operate the shooting range, already the subject of two lawsuits, at a site four miles north of Bear Butte State Park.

Sturgis Mayor Mark Ziegler said he could not comment on the shooting range because of ongoing litigation.

One of the lawsuits, filed against HUD in April by a group of Sturgis residents, made the allegation that the shooting range would not benefit low- and moderate-income people as required by CDBG criteria. Federal rules require that grants go to projects that would benefit a geographic area where at least 51 percent of the population is low- or moderate-income.

A second lawsuit, filed in February, contends that the state failed to consult with American Indian tribes about the shooting range's impact on Bear Butte, a site sacred to a number of tribes. The judge in that case on Thursday postponed indefinitely a Nov. 4 trial date, noting that the state's move to cancel the grant could end the project.

HUD investigated the shooting range grant and a series of grants awarded from the $8.5 million worth of South Dakota's 2002 CDBG cycle. HUD found a pattern in which the state consistently used low- and moderate- income data that exceeded existing census data by double-digit percentages.

In the case of the shooting range grant, U.S. census data showed that 42.5 percent of Sturgis residents meet that definition. In contrast, a telephone survey used to support the grant showed that 56.1 percent of the people in Sturgis meet that definition.

"There is a consistent pattern of survey results showing a significantly higher percentage of low- and moderate- income persons than Census data," the HUD report says. "The difference between the survey data and both 1990 and 2000 Census data often exceeds 10 percent. In one egregious case, the difference is more than 20 percent."

HUD found that when census data already showed an area met CDBG guidelines, the census data was used to support the grant, and no survey was done.

Communities where a survey showed a different percentage of low- and moderate-income people from the 2000 Census are listed below.

Also, HUD found that the state repeatedly did not clearly identify the geographic area that would benefit from a given grant. HUD also found that sometimes one geographic area was identified as the area that would benefit, but data from a different geographic area was cited when listing the criteria.

State of South Dakota officials have 45 days from the Aug. 18 report to respond to HUD's findings. If HUD and the state are unable to agree on what should be done, HUD rules allow the agency to take one of six different actions. Those include issuing a letter of reprimand, canceling future block grants to the state and instituting a policy of releasing grant funds only after HUD officials approve the projects in question.